Good morning, ladies and gentlemen. Thank you for standing by and welcome to the Natural Resource Partners L.P. first quarter 2020 earnings conference call. At this time, all participants are in listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions]. I will now like to turn the conference over to your speaker today, Tiffany Sammis, Investor Relations. Please go ahead.

Good morning and welcome to the Natural Resource Partners first quarter 2020 conference call. Today's call is being webcast and a replay will be available on our website. Joining me today are Craig Nunez, President and Chief Operating Officer, Chris Zolas, Chief Financial Officer and Kevin Craig, Executive Vice President of Coal. Some of our comments today may include forward-looking statements reflecting NRP's views about future events. These matters involve risks and uncertainties that could cause our actual results to materially differ from our forward-looking statements. These risks are discussed in NRP's Form 10-K and other Securities and Exchange Commission filings. We undertake no obligation to revise or update publicly any forward-looking statements for any reason. Our comments today also include non-GAAP financial measures. Additional details and reconciliations to the most directly comparable GAAP measures are included in our first quarter press release, which can be found on our website. I would like to remind everyone that we do not intend to discuss the operations or outlook for any particular coal lessee or detailed market fundamentals. In addition, I refer you to Ciner Resources' public disclosures and commentaries for specific questions regarding our soda ash business segment. Now, I would like to turn the call over to Craig Nunez, our President and Chief Operating Officer.

Thank you Tiffany. Good morning all. I hope you and your loved ones are safe and healthy. COVID-19 has changed the way we live, work and interact with others. It has familiarized us with telecommuting, contact tracing and Zooming. It has reminded us of the importance of the people and industries essential to our way of life and the difficulties that result when those people and activities are threatened. Most importantly, it's reminded us that we are all in this together. I hope that in the years to come, everyone will look back with pride in how they responded to this challenge and those who come after us will say that this generation of Americans, our generation, was as strong as any to come before or since. I am pleased to announce that we, at NRP, are doing our part. We continue to operate under CDC guidelines, government imposed rules and company remote work protocols. Our employees are safe and the partnership is conducting business as usual. Our succession management plans and delegation of authorities are in place, should we need them. Our conservative financial approach, the hard work of our team and the support of our bank, debt and equity holders in recent years are now paying off. We have robust liquidity, consisting of $107 million of cash and $100 million of available borrowing capacity. We continue to generate significant free cash flow and our parent company bonds do not mature until 2025, all of which provides us with a great deal of financial flexibility to manage through this pandemic. We recorded $146 million of free cash flow over the last 12 months, paid off $93 million of debt, added $41 million to common unitholders equity before non-cash accounting impairments and paid out $32 million of common unitholder distributions.…

Thank you Craig and good morning everyone. During the first quarter of 2020, we generated $30 million of operating cash flow from continuing operations and $19 million of net income. Basic and diluted earnings per common unit for the first quarter were $0.90 per unit and $0.52 per unit, respectively. Our coal royalty segment generated $27 million of net income and $31 million of operating cash flow during the first quarter of 2020. These results were lower as compared to the prior year quarter, primarily due to a decline in global steel demand that resulted in a weaker market for metallurgical coal. As a result, both sales volumes and prices for metallurgical coal were lower in the first quarter of 2020 compared to the prior year period. In terms of our coal royalty sales mix, metallurgical coal made up approximately 60% of our total coal royalty sales volumes and approximately 65% of our coal royalty revenue during the first quarter of 2020. I would also like to note that our largest lessee, Foresight Energy continues to operate despite filing for bankruptcy in March 2020. Prior to its bankruptcy filing, Foresight entered into agreements with its pre-petition lenders to support its restructuring process. In addition, Foresight amended contracts with certain of its other key counterparties, including NRP, to support their restructuring plan. We do not believe the amendments to our agreements with Foresight will a material adverse effect of our financial condition or results of operations. In its bankruptcy filings, Foresight announced its intention to continue to operate the Sugar Camp, Williamson and Hillsboro Mining complexes. While Foresight's filings announce the idling of the Macoupin mine, Foresight also announced that they recommenced longwall production at its low-cost Hillsboro mine. We expect that adverse impacts from the idling of the Macoupin mine…

[Operator Instructions]. Your fist question comes from the line of Mark Levin with Benchmark Company. Please go ahead.

Great. Thanks very much. I hope you guys are doing well and staying safe. Just a quick question as it relates to your comment about the cash flow cushion turning negative. Does that impact or will that impact how you guys think about how much liquidity or cash you hold versus paying down debt? How does the cash uses change in the environment in which we have, if at all?

Mark. This is Craig. I will take the first stab at that and let Chris add on if he wants. It doesn't change anything at all. The beauty of our liquidity position is that that cash flow cushion could go significantly negative. And we have a very long runway that we could fund that negative cash flow cushion with the liquidity that we have. So it gives us a -- so it doesn't change our view. We are going to continue to pay down debt. And as I said in the prepared remarks, we would like to reinstate the common distribution in August. However, we just need to see how things play out over the next couple of months in the macro environment before we do. Chris, do you have any comment on that?

No. I think you hit all the key points there.

Great. And I guess we are sitting here almost midway through, we are working our way through the second quarter. Not looking for guidance, but just I think you had mentioned nine idlings on your properties, most of which or some of which had returned. To the extent you do have visibility into 2Q, since we are sitting here in the middle of it, I mean is there going to be a step change or should we expect a step change in what shows up as coal royalty production? Obviously we can see the prices on the met side or at least have a general idea directionally, but just kind of thinking about what you guys are seeing from a volume perspective, maybe you can you answer that without being specific.

Sure. Mark, I will take a swing at that and try to help you with it. And then I will let Kevin comment as well if he has further comments. Keep in mind that we receive payments at the end of a month for the production that occurred the previous month. So we really don't have visibility, for example, into March until the end of April and we don't have visibility into April until the end of May in our coal business, other than what we can glean from talking with our operators. But it is fair to say that in April, as we were collecting for March, we did see a decline. And I would say, it's a noticeable decline in production that occurred, that was starting to occur that we expect to continue. I don't know what's happening, I don't know how that's going to react with the resumption of operations at a number of our properties but we are starting to see a decline that is certainly nothing that's on the magnitude that this point gives us concern regarding our ability to continue operating business as usual, given the free cash flow generation that we have and also if that doesn't prove to be enough, we also have significant cash reserves and liquidity. So Kevin, do you have any other comments?

No. Craig, I think that's a good summary of what we are seeing so far here into the Q2.

Got it. And back to your distribution comment about August, are there certain things that you are looking for or certain metrics or what exactly would give you the confidence to resume? What are you specifically looking to see, Craig ?

We want to see what happens with our trend in cash flows. And that's trend in cash flows both from the coal side and the soda ash side as well. We are just in the -- we are somewhat in the early innings of seeing the impact on the business, both of those businesses, with respect to COVID-19. And what we don't know is if things are going to somewhat stabilize and begin to come back up again, we don't exactly how deep the trough is going to be or how long the duration is going to be. And we are hoping that in the next couple of months, we will have more visibility into that. We watch the medical numbers but we are certainly not experts at the medical side. So I can't say that we have any firm targets on number of new infections or that type of thing because that's just not inside our wheelhouse. But we are interested to see what happens to global soda ash demand and pricing. We are interested see what happens to volumes and pricing on the met and thermal side as we get into later this month and into June and July to see if the reopening of the American U.S. economy. We have seen that China is ahead of us and see how that reopening continues to play out. Great Britain is announcing plans to reopen. Germany is doing the same thing. Various parts of Europe are doing the same thing. We want to see how this plays out. And of course, if we get a month down the road and suddenly cases are spiking again and those economies are closing back up, that will not be a good result. If on the other hand, everything continues to proceed in a relatively positive fashion, hopefully soda ash and coal demand and pricing will respond accordingly and we will feel more optimistic about what we can do with the distribution.

That makes perfect sense. Well, greatly. I appreciate the time this morning.

Thanks for your questions, Mark.

And there are no further questions at this time. I will turn the call back over to the presenters for closing remarks.

Thank you operator and thank you everyone for participating in our call and thank you for your support of NRP. This is a very unique, yet somewhat interesting time. It's a tragic time and we will continue to work and be safe and attempt to deliver value for all our stakeholders. So with that, thank you for participating. Stay safe and healthy. Have a good day.

This concludes today's conference call. You may now disconnect.